What are the best gold stocks to buy?
Many Wall Street professionals would urge you to keep at least a small portion of your portfolio invested in gold. Although historically the stock market has yielded impressive returns in the long run, when the market is down, safe havens like gold help to offset the declines.
Moreover, gold makes a great hedge against inflation, helping to offset the loss of buying power when prices are on the rise.
Then again, most investors have neither the amount of money needed nor the desire to invest in a pile of physical gold and store it in a safe. That’s where gold stocks come in.
Best Gold Stocks to Buy
Gold stocks hit the limelight in 2020 as the price of gold climbed to record highs on pandemic-related fears driving the stock market down sharply. Since then, gold prices have tapered off a bit, leading many to believe that the precious metal is undervalued.
But if you want to get in on the action, where do you start?
Here’s a list of some of the best gold stocks on the market today:
1. Barrick Gold Corp (NYSE: GOLD)
With more than 14.5 million shares traded during the average trading session, Barrick Gold is one of the most popular mining companies on the market today. The Canadian company is also one of the most valuable, trading with a market capitalization of well over $35 billion.
Barrick owns 14 gold mines, six of which are Tier One Gold Assets, which means these six mines have a life expectancy of more than 10 years, with annual production of at least 500,000 ounces of gold.
To put it simply, the company owns six assets of the highest quality and highest expected return in the gold industry.
As mines pull gold out of the earth, these deposits are eventually depleted. Barrick is constantly exploring and acquiring new land and working toward the development of new mines. When looking for and developing new assets, the company centers its focus around potential opportunities that are expected to have a long life expectancy and come with the best operating margins.
Barrick Gold Key Stats
As one of the largest, most heavily traded mining companies on the market, Barrick is known for high levels of production, resulting in strong revenues, earnings, and growth.
- 2020 Revenue. Last year proved to be a great one for the company, with revenues climbing from $9.717 billion in 2019 to $12.515 billion in 2020, benefiting greatly from the spike in the cost of gold caused by the global coronavirus crisis.
- Gold Production. In 2020, Barrick produced a whopping 4.8 million ounces of gold. This figure came in well below the 5.465 million ounces produced in 2019, but these declines were expected and more than offset by the rise in gold prices in 2020.
- Fundamental Data. From a fundamental perspective, the stock is an attractive buy. The current price-to-earnings ratio (P/E ratio) is just over 14, with earnings per share (EPS) of $0.23. The P/E ratio is well below the industry average of 16.33, according to CSI Markets. From a price-to-sales (P/S ratio) standpoint, the picture is even more attractive, with the figure coming in at just 2.85.
- Dividends. Barrick is known for showing appreciation for investors by way of dividends. Over the past five years, the yield on the stock has averaged 1.04%, ranging during this period between 0.39% and 2.56%.
- Trading Volume. Liquidity is important when making any investment. After all, when it’s time to sell shares and make your exit, you want to know there’s a buyer on the other end. As mentioned above, more than 14.5 million shares of Barrick’s stock are traded during the average trading session. You can rest assured there will almost certainly be a buyer when you’re ready to make your exit.
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2. Newmont (NYSE: NEM)
With a market cap of well over $47 billion, Newmont is the largest gold mining company in the world, and it has a solid balance sheet to match. The company employs more than 31,000 people who manage some of the world’s largest gold fields, gold mines, and reserves.
The company currently owns 22 mines, 10 of which are dedicated to underground mining and 12 of which are dedicated to surface mining.
Like Barrick, Newmont is always working to expand its reach, developing new mines before currently operational mines ever get close to depletion. In fact, the two companies reached an agreement in 2019 to co-develop the Nevada Gold Complex. The complex is expected to rank as the largest gold production project in the world, featuring three of the world’s top 10 Tier One Gold Assets.
The company’s gold reserve base — a lineup of unmined gold resources — is a key differentiator for Newmont, with more than 90% of this reserve base being located in top-tier jurisdictions. As the company continues to build out its mining capacity, maintaining its position as the leader in its industry, it only makes sense that continued growth in value can be expected.
Newmont Key Stats
As the largest company centered around gold mining operations in the world, Newmont is known for producing eye-opening revenues matched with strong dividends and fundamental data. Here are the key stats:
- 2020 Revenue. As with most major players in the industry, Newmont had a strong year in 2020, producing revenues of $11.479 billion. That figure showed strong growth over the company’s 2019 revenue, which came in at $9.740 billion.
- Gold Production. In 2020, Newmont produced 5.9 million ounces of gold, slightly lower than the 6.3 million ounces produced in 2019, but right on target with the company’s guidance.
- Fundamental Data. From a fundamental standpoint, NEM is slightly overvalued, but investors often give a premium to the largest players in an industry. As of September 2021, the P/E and P/S ratios on the stock were 18.47 and 3.84, respectively.
- Dividends. The company is known for paying strong dividends in relation to its competitors. In the past half decade, dividend yields have averaged 1.21%, with high and low yields of 3.11% and 0.24%, respectively.
- Trading Volume. As the largest gold mining company in the world, it only makes sense that the stock has heavy interest. More than 5.8 million shares of Newmont stock trade hands in the average trading session.
3. Kirkland Lake Gold (NYSE: KL)
Kirkland Lake Gold is another massive company focused on mining gold, pulling more than 1 million ounces out of the ground every year. The company’s core operations are international, with mines in Canada and Australia.
The company’s claim to fame is its ownership of three high-quality mines, including the Macassa Mine and Detour Lake Mine in northern Ontario, Canada. The third of the company’s flagship mines is the Fosterville Mine located in the state of Victoria, Australia.
Importantly, all three of these flagship mines generate free cash flow and come with incredible in-mine growth potential. At the same time, the land owned around these mines offer attractive regional exploration opportunities that the company believes will drive significant growth in the future.
Not to mention, the stock is an attractive option for income investors. Since 2017, the company has paid quarterly dividends without missing a single quarter. Moreover, its dividends have consistently increased on a year-over-year basis.
Kirkland Lake Gold Key Stats
Since inception, Kirkland Lake has consistently increased revenues, offering significant growth that’s hard to ignore. Here are the key stats:
- 2020 Revenue. In 2020, revenue growth was compelling to say the least, with total revenues coming in at $2.46 billion. That’s a whopping $1.08 billion increase over the $1.38 billion generated in 2019.
- Gold Production. Kirkland Lake produced 640,467 ounces of gold in 2020, beating its own guidance of between 590,000 and 610,000 ounces.
- Fundamental Data. The fundamental data surrounding the stock is attractive, with the P/E and P/S ratios coming in at 13.59 and 4.51, respectively.
- Dividends. While Kirkland Lake just started paying dividends in 2017, it has consistently increased its payments annually. Over the past half decade, the yield on the stock has ranged from 0.24% to 1.96%, averaging 0.71%.
- Trading Volume. Finally, the stock may not be the most popular on this list, but it definitely has plenty of liquidity with nearly 1.5 million shares trading hands during the average trading session.
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4. Franco-Nevada Gold (NYSE: FNV)
Franco-Nevada Gold isn’t itself a gold mining company. Instead of doing the hard mining work and taking the risk that comes along with it, the company is focused on streaming and royalties.
Streaming agreements involve the company providing the upfront funding to develop and operate mines in exchange for the ability to purchase some or all of the gold they produce at a heavily discounted contractual rate.
Essentially, Franco-Nevada Gold provides the upfront cash that miners need to operate their mines, which is a very expensive business. After all, on top of the cost of the land itself and the labor it takes to operate a mine, mining companies pay huge sums for equipment and the fuel that runs it.
In exchange for the upfront funding, Franco-Nevada Gold gains the right to buy gold at contractually reduced rates in the future.
This means Franco-Nevada Gold can benefit no matter how the price of gold changes. When gold prices rise, it has contractual rights to purchase the commodity at highly reduced rates. When gold prices drop, the company cuts the biggest deals when miners are eager to get their hands on much needed cash.
Franco-Nevada Gold Key Stats
Franco-Nevada is quickly becoming a key player in the gold industry, with growing revenue and earnings to match. At the same time, it provides reliable income to investors. Here are the key stats:
- 2020 Revenue. In 2020, the company generated $1.02 billion in revenue, showing a steep year-over-year climb from the $844 million it produced in 2019.
- Gold Production. Since the company is focused on royalties and streaming, it doesn’t produce gold; it produces profits!
- Fundamental Data. The stock appears highly overvalued compared to its mining counterparts, but due to a fundamental difference in Franco-Nevada’s business model and the stability it has built over the years, the overvaluation may be justified. The P/E and P/S ratios on the stock were 41.76 and 22.83 as of September 2021.
- Dividends. Known for paying consistent dividends to investors, the stock has offered a dividend yield of 1.09% over the past five years. The high and low yields have come in at 1.59% and 0.62%, respectively.
- Trading Volume. Over half a million shares of the stock trade hands during the average trading session, meaning there shouldn’t be any shortage of buyers when you decide to exit your investment.
5. Agnico Eagle Mines (NYSE: AEM)
Agnico Eagle Mines is another of the top gold mining stocks based in Canada. However, this mining goliath’s operations stretch internationally, with active mining projects in Finland, Mexico, and the United States.
Agnico Eagle Mines has a unique policy regarding gold sales, which points to the faith it has in the commodity it produces. Unlike many other mining operations, Agnico Eagle doesn’t take part in forward gold sales. It’s not interested in accepting upfront cash in exchange for a discount on the gold it produces in the future. Instead, it only sells what it produces once it’s been produced.
The business model has worked out for decades, with the company displaying strength and stability even when gold spot prices have been down.
In fact, the company is so strong and consistent that it’s been paying dividends to investors every year since 1983, regardless of the current price tag on an ounce of gold.
Agnico Eagle Mines Key Stats
Founded in 1953, Agnico Eagle has decades of experience producing solid returns for investors, offering compelling revenue growth and dividends to match. Here are the key stats:
- 2020 Revenue. 2020 proved to be a great year for Agnico Eagle, especially in terms of revenue growth. After producing $2.495 billion in revenue in 2019, the company smashed expectations and generated $3.138 billion in 2020.
- Gold Production. In 2020, the company produced 1.737 million ounces of gold, following up on the 1.782 million ounces produced in 2019.
- Fundamental Data. From a fundamental standpoint, the stock is slightly overvalued, trading with P/E and P/S ratios of 19.11 and 3.77 as of September 2021.
- Dividends. This is where Agnico Eagle really shines. The company has paid cash dividends every year since 1983 and has increased its dividend nearly every year since. Over the past half decade, its dividend yield has averaged 1.08%, with a high of 2.46% and a low of 0.60%.
- Trading Volume. Over 1.25 million shares of the stock trade hands during the average trading session, making this one of the most popular stocks in the gold sector.
6. Kinross Gold (NYSE: KGC)
Founded in 1993, Kinross Gold is one of the younger companies on this list. But don’t let its age fool you; it has quickly grown to become a leader in its space with mines in the U.S., Brazil, Ghana, Mauritania, and Russia.
While the company’s mining operations are strewn around the world, the vast majority of its production comes from operations in the United States. This is important because it provides geopolitical insulation.
For example, if tensions between the U.S. and Russia were to heighten and sanctions were to be placed on commodities, limiting trade between the two countries, Kinross would only lose a small percent of its production, whereas other companies with the majority of their operations overseas would likely experience a bigger hit.
Considering the current geopolitical situation, the fact that Kinross follows a strategy of keeping the majority of its operations in North America is a major benefit.
Kinross Gold Key Stats
Kinross is a revenue-growth powerhouse, and with a recent reintroduction of dividend payments, it is an attractive play for gold-centric investors. Here are the key stats:
- 2020 Revenue. Kinross did so well in 2020 that it resumed dividends after a seven-year suspension that started in 2013. The company generated $4.213 billion in revenue during the year, blowing away the $3.497 billion generated in 2019.
- Gold Production. In 2020, the company produced 2.4 million ounces of gold, following up on the 2.5 million produced in 2019.
- Fundamental Data. Kinross is one of the most fundamentally undervalued stocks on this list. In September 2021, it was trading with a P/E ratio of just 6.07 and a P/S ratio of 1.82.
- Dividends. As mentioned above, KGC recently ended a seven-year suspension on its dividend payments. The current yield on the stock was 2.5% as of September 2021. Should the company maintain such a high yield, it will quickly become a prized holding among income investors.
- Trading Volume. With more than 12.5 million shares of the stock trading hands during the average trading session, there’s sure to be a buyer when you decide it’s time to exit your position.
7. Sibanye-Stillwater (NYSE: SBSW)
Sibanye-Stillwater is a unique entry on this list because its claim to fame actually isn’t gold. While it does operate gold and base metals operations in South Africa and the Americas, the company’s core focus centers around a diverse portfolio of platinum group metals (PGM) mined in operations in South Africa and the U.S. These core metals include platinum, palladium, rhodium, ruthenium, and iridium.
The company is also a major player in the production of lithium, a metal that has seen incredible growth in value as the world shifts toward electric vehicles. After all, lithium is a key component in the batteries that run these vehicles, and one that’s not widely available.
Founded in November 2012, the company is one of the youngest on this list, but it has already grown to be worth more than $10 billion. If history is any indication, its growth is far from over.
Considering the leadership role the company has built for itself over such a short period of time, and a focus on rare precious metals in high demand, this stock is one to watch very closely.
Sibanye-Stillwater Key Stats
Sibanye-Stillwater is an attractive play because of its strong revenue growth and recent increased production of precious metals. Here are the key stats:
- 2020 Revenue. The company is based in South Africa and reports its revenue in South African rand rather than U.S. dollar. No matter how it’s reported, the 2020 year was a hit. During the year, the company generated revenues of 127.392 billion rand (about $8.75 billion), up from 72.925 billion rand (about $5 billion) in 2019.
- Gold Production. In 2020, the company produced 0.98 million ounces of gold. However, the real value came from the approximately 3 million ounces of PGM produced in the year. Those numbers grew significantly from 2019, when it produced 0.9 million ounces of gold and 2.2 million ounces of PGM.
- Fundamental Data. From a fundamental perspective, the stock is another of the most undervalued opportunities in its space. The P/E ratio as of September 2021 was just 3.66, with a P/S ratio coming in at an even 1.
- Dividends. In 2020, SBSW started making dividend payments to investors, and those payments have been impressive. The current dividend yield on the stock as of September 2021 is 8.75%.
- Trading Volume. Not only is the stock clearly undervalued, it’s a heavily traded name on Wall Street, with more than 2.4 million shares trading hands during the average trading session.
8. Wheaton Precious Metals (NYSE: WPM)
Wheaton Precious Metals is another company with no interest in being a gold producer. Instead, its focus is on precious metals streaming agreements whereby the company provides the upfront funding to develop and operate mines and benefits from the ability to purchase some or all of the gold produced by the mine at a heavily discounted contractual rate.
Wheaton is one of the largest metals streaming companies in the world, boasting a more than $20 billion market cap. The company currently has a financial interest in 23 operating mines and eight development-stage mines scattered around the world.
The vast majority of streaming agreements are relatively short term, but Wheaton does its agreements differently than most. Sure, it makes some short-term streaming deals, but it’s also one of very few companies with contracts that span the life of the mine they’re invested in.
This gives the company a competitive advantage rarely seen in the metals streaming space.
Wheaton Precious Metals Key Stats
As one of the world’s largest gold and other metal streamers, Wheaton is known for providing a significant return on investment with reliable growth and compelling income. Here are the key stats:
- 2020 Revenue. In 2020, the company generated $1.096 billion in revenue, blowing away the $861 million produced in 2019.
- Gold Production. As a streaming company, Wheaton does not produce gold or any other metal — it leaves that work up to the miners it signs the contracts with.
- Fundamental Data. As with other streaming companies on this list, the stock appears to be overvalued compared to mining operators. It currently trades with a P/E ratio of 33.07 and a P/S ratio of 6.83. However, compared to other metals streaming companies, these figures are about average.
- Dividends. Investors enjoy the income generated when investing in WPM. The dividend yield on the stock has averaged 1.32% over the past half decade, with the highs and lows being 2.35% and 0.68%, respectively.
- Trading Volume. More than 1.7 million shares of Wheaton stock trade hands on the market in the average trading session, showing there’s plenty of interest should you decide to sell out of your position.
9. Royal Gold (NASDAQ: RGLD)
Royal Gold is one of the world’s leading streaming and royalty companies, currently trading with a market capitalization of more than $7.5 billion. The company’s revenue is driven in two ways.
First and foremost, it’s a streamer, providing upfront cash to mining companies in exchange for contractually obligated discount rates on gold produced in their mines.
The second income source is through royalties, which work just like royalties on music and art. Like with streaming contracts, Royal Gold provides the upfront cash mining companies need to develop and operate gold mines. However, instead of receiving a low rate to purchase the gold produced, Royal Gold receives a royalty, sharing in the profitability when the produced gold is sold to a buyer.
This business model has worked out well for the company, leading to growing revenues and increasing investor interest.
Royal Gold Key Stats
Yet another company known for strong growth in revenue as well as worthwhile dividend income, investors have been excited to buy into RGLD. Here are the key stats:
- 2020 Revenue. The company produced $498.8 million in revenue in 2020, blowing the $423 billion it produced in 2019 out of the water.
- Gold Production. As a streaming and royalty company, Royal Gold has no interest in producing gold itself. Instead, it makes its money from the gold produced by the mines it’s invested in.
- Fundamental Data. Like other streamers and royalty companies, RGLD appears overvalued when compared to mining companies. However, compared to other royalty and streaming companies, its fundamentals compare well. The P/E and P/S ratios on the stock are 24.54 and 12.03, respectively.
- Dividends. Over the past half decade, the company has paid an average dividend yield of 1.10%, with a high of 1.54% and a low of 0.75%.
- Trading Volume. Shares of the stock trade hands about 368,000 times during the average trading session. While it’s far from the most active stock on this list, there should be plenty of buyers when it’s time to make your exit.
Consider Gold ETFs
If you want exposure to gold but don’t want to buy physical gold or shares in mining, streaming, and royalty companies, there is another, less research-intensive option. Exchange-traded funds (ETFs) are a popular way to give investors exposure to the entire market or specific industries without having to do the daunting task of stock picking.
Today, there are funds for just about every category, including several gold miners ETFs. These funds pool investing dollars from a large group of investors, and invest the combined assets in a diversified list of gold mining stocks chosen for specific qualities. The heavy diversification in these funds protect the investor from volatility because when one stock falls, gains in others help to reduce the hit.
Whether you’re a beginner who lacks the know-how or an experienced investor who simply doesn’t have the time it takes to research several stocks for a diversified portfolio, consider taking the ETF route.
With gold prices having cooled off after a COVID-induced run, it only makes sense that more and more investors are diving in while the value is there. There’s no question that investing in gold and the companies that mine and sell it can be a lucrative endeavor. After all, plenty of investors have leveraged gold on their way to wealth.
However, it’s important to keep in mind that not all gold stocks are created equal, as is the case with any sector. It’s important to do your research before diving into any investment.
Disclosure: The author currently has no positions in any stock mentioned herein nor any intention to hold any positions within the next 72 hours. The views expressed are those of the author of the article and not necessarily those of other members of the Money Crashers team or Money Crashers as a whole. This article was written by Joshua Rodriguez, who shared his honest opinion of the companies mentioned. However, this article should not be viewed as a solicitation to purchase shares in any security and should only be used for entertainment and informational purposes. Investors should consult a financial advisor or do their own due diligence before making any investment decision.